Every parent of college-aged kids knows this horror story: They get their first credit card and the sky’s the limit. Then the bills roll in.

In response to the “college credit crisis,” the Credit Card Accountability, Responsibility and Disclosure [CARD] Act of 2009 took significant steps to protect students against the perils of charging away their future. However, parents must also do their part. Your children will soon be surrounded by debts—college loans, car payments and, someday, possibly a home loan. Teaching them the basics will go a long way in helping them take control of their financial future.

Here are some tips to help kids understand and build their credit—without going into debt yourself.

1. Don’t give loans

While children can be taught the basics of money management at an early age, credit is more complex. It’s important to lay a foundation for them with simple lessons in earning and saving. Step one? Never advance their allowance.

If they don’t understand their own money, like an allowance, money they earn from jobs or gifts, then extending credit could make bad habits worse.

Once they learn to manage their cash, then they can start viewing credit as money also. Help them develop a simple budget and incorporate credit card spending and calculate any interest rates and fees. By adding up costs over time, they’ll get a complete picture of how credit can significantly add to the expense of a purchase over time.

There are also a number of games and resources aimed at making credit lessons fun and accessible for teens and tweens. Thrive Time presents kids with real-life scenarios like using credit cards for big purchases or buying a car., an interactive financial education website for children, parents and educators, has a Teen section with quizzes and facts about debt and credit.

2. Work first; then borrow

That summer job working as a lifeguard or at a fast-food restaurant may have benefits beyond a little spending change. Working teaches kids the responsibility of money management. They’ll think more about their purchases when they’re paying out of their own pockets. They have to understand the value of a dollar. That only comes through working.

Additionally, lenders look favorably on young applicants with a work history, so when your child is ready for that first car, he or she will have already established an employment record.

3. Let your child lead

Opening a first bank account is a big moment and an important credit enhancer, but don’t be a helicopter parent. Rather than taking control of the process, educate your kids about their options and give them support; then allow them to make the final decisions.

When it’s time to open an account, let your child complete the forms, talk with a bank representative and ask questions. If you’re discussing different saving plans, explain the alternatives and let them choose. You may want to have access to their online banking account to monitor their progress, but let them have their own ATM cards and checkbooks. The more you let kids do things on their own, the better.

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4. Build from there

Young people need to learn that credit isn’t scary; in fact, it’s an important building block for financial success. Help them take measured progress towards building a credit record. One place to start is with a secured card backed by a savings account, but watch for high fees. Once your child is ready for more responsibility, he or she can apply at a favorite retailer for a low-limit card.

Don’t offer to co-sign, however. If you’re co-signing for everything, then you’re not building their credit. You want to look for a lender who will work based on their credit history alone.

While you want to give them the freedom to learn smart credit card use, it’s a good idea to monitor their bills in the beginning. Having access to their online accounts will let you remind them of upcoming payments, keep an eye on their spending and flag any unusual activity. With credit card use comes credit card fraud, and it’s important for kids to learn to identify that as well.

All parents want to prepare their children for whatever challenges they may face. When it comes to credit, education and empowerment are the best tactics to make them smart, strong consumers for life.

Written by Greg Brown. Originally published as part of Northwestern MutualVoice on